The former head of the US-led civilian administration in Iraq has defended his decision to send billions of dollars in cash to Baghdad in 2003 and 2004.

Paul Bremer told a Congressional committee investigating allegations of waste and fraud that he had done his best to kick-start Iraq's economy.

The funds came from Iraqi oil revenue and previously frozen assets.

Much of the money went missing and critics say there was no system to track how it was used.

"Who in their right mind would send 360 tons of cash into a war zone? But that is exactly what our government did," Henry Waxman, the Democratic chairman of the House Oversight and Government Reform Committee said during Tuesday's hearing.

As often in Iraq the ideal collided with the harsh realities on the ground

Paul Bremer

He added that there was no way of knowing whether the cash - totalling $9bn and flown in pallets from the US - would end up in enemy hands.

Mr Bremer, who headed the Coalition Provisional Authority (CPA) before sovereignty was transferred to Iraq in June 2004, responded that he was trying to make the best of a bad situation.

He acknowledged that, ideally, modern financial systems for control of the Iraq funds should have been set up.

"But as often in Iraq the ideal collided with the harsh realities on the ground," he said.

He said the CPA chose not to delay paying salaries and pensions, as this would have been "demoralising and unfair" to millions of Iraqi families.

During the hearing, Mr Bremer said it was "difficult to give a full picture of the desperate situation in Iraq in May 2003".

The country, he told the panel, "was in chaos, socially, politically and economically".

The Democrats, who took control both houses of the US Congress last month, are overwhelmingly critical of the Bush administration's decision to go to war.

Congress is considering moves to block the president's plan to send 21,500 extra troops to Iraq.